Varying a contract of employment - Acas

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In what circumstances can an existing contract authorise changes in the employee’s working conditions? • A contract may contain express terms which allow an employer to make changes to employees’ terms and conditions. The fexibility clauses may be quite specifc or they may include a general power to allow the employer to change the contract terms. WARNING As case law suggests that tribunals and the courts often place a fairly narrow interpretation on fexibility clauses an employer should seek legal advice if they intend to rely upon the fexibility clause in their employees’ contracts to vary the terms and conditions. How can an individual contract be varied by a collective agreement? • A contract of employment is in law an agreement between an employer and an individual employee. Any variations to the contract need that individual’s agreement. However, an employer and employee can agree, either expressly through a clause or reference in the employee’s contract, or through an implied term, that relevant changes in terms and conditions can be negotiated by a trade union(s) on the employee’s behalf. This may be the case whether or not the employee is a member of the recognised trade union(s). Varying a contract: employers’ questions What’s the frst thing I should do? Consult with your employees (or their representatives) about any proposed changes to their contract with the aim of seeking the employee’s agreement. It is best practice for you to seek written consent to the changes from the employee (an e-mail response from your employee would normally be acceptable). You must also provide a written statement detailing the changes to their written statement of terms and conditions within one month of the change taking effect. It is best to renegotiate an existing contract through consultation and discussion with your employees. The aim of this is to reach a compromise. 4 VARYING A CONTRACT OF EMPLOYMENT
Is it worth offering incentives? It maybe. Some employers offer incentives to encourage their employees to agree to the change(s). You might offer to “buy out” a term in the contract to allow them to introduce a different contractual term. Incentives do not have to be fnancially costly to a company, for example, a company wishing to alter shift patterns may be able to offer extra paid or unpaid leave in exchange. For more information contact the Acas Helpline on 08457 47 47 47 or take legal advice. Can I impose a contract unilaterally? If you impose a new contract unilaterally you will be in breach of contract and your employees may well: • make legal claims against the company for constructive dismissal if the breach is fundamental and signifcant • claim damages for breach of contract at a civil court • claim at an employment tribunal for unlawful deduction from wages if the change affects their pay. Imposing a change is also likely to affect the employees’ level of engagement, morale and performance and you should seek legal advice or speak to the Acas Helpline on 08457 47 47 47 for further information. Good practice tips: ✓ keep talking and consult with employees – this will help maintain levels of productivity and engagement ✓ follow your internal policies – employees should raise formal grievances with their employers if they are not happy with a variation in their contract ✓ consider the options – reaching a compromise is the best way of preserving good employment relations at work ✓ call Acas Helpline on 08457 47 47 47, and seek legal advice where appropriate. What if I can’t reach agreement with my employees? If you cannot reach agreement with your employees you can serve notice to terminate the existing contract and offer the employee re-engagement on the new terms. This should be considered only after full and thorough consultation with employees and their representatives and treated as a last resort. By doing this you will be dismissing the employee and it is important that you follow a fair dismissal process and offer the employee the right of appeal against their dismissal. Your employee may make a claim to an Employment Tribunal for unfair dismissal. It would be for the Employment Tribunal to decide whether or not the dismissal was fair or unfair. VARYING A CONTRACT OF EMPLOYMENT 5
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Varying a contract of employment - Acas

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